Recently, many people have asked me how to make money from forex trading. Essentially, it all boils down to one word—exchange rate difference. I’ve organized my experiences over the years and hope it can be helpful to everyone.

First, it’s important to understand what the exchange rate difference is. Simply put, it’s the price difference of the same currency at different times or through different channels. For example, if I buy euros at a rate of 1.0800 and later sell at 1.0900, that 100-pip fluctuation can bring real profit. To calculate how much you earn, the formula is straightforward: (closing price - opening price) × trading volume. For instance, buying 100,000 units of EUR/USD can earn you $1,000.

Regarding ways to profit from exchange rate differences, I generally categorize them into three main types. The most stable is bank foreign currency fixed deposits, which have low risk and low barriers, but honestly, they mainly earn interest rather than exchange rate differences. Plus, fixed deposits can’t be traded flexibly during the period, so you might miss opportunities. The second type is foreign currency funds, which carry medium risk, allowing you to profit from currency fluctuations and also from the growth of the investment assets themselves—double gains. The third is forex margin trading, which is the riskiest but also offers the highest returns. It amplifies gains through leverage, so small market movements can lead to big profits.

I personally prefer margin trading because of its low costs. Banks’ buy-sell spreads often start at around 0.3%, while forex trading platforms’ spreads are usually less than a tenth of a percent. Over the long term, this difference can save a lot of money. Plus, it allows for two-way trading—buy when expecting prices to rise, sell when expecting them to fall. T+0 trading means you can trade as many times as you want on the same day, with much greater flexibility than banks.

As for specific trading strategies, I’ve tried several. Range trading is suitable during sideways markets, buying at support levels and selling at resistance levels, but it’s crucial to strictly set stop-losses; otherwise, a breakout can lead to heavy losses. Trend trading involves following the main direction, holding positions medium to long term. Once a trend is established, it tends to be relatively stable. The key is to set proper stop-loss levels so that profit targets are larger than potential losses. Day trading suits those who prefer short-term trades; the focus is on capturing key economic data releases or central bank decisions, entering and exiting quickly to avoid overnight risks. Swing trading falls between the two, requiring technical analysis to identify volatile assets and fundamental analysis to catch market triggers. Taking profits when the time is right is very important. Position trading involves holding long-term for appreciation, requiring less time but needing to find low-cost entry points.

Why choose forex trading? First, it has wide applications—travel abroad, online shopping, international trade—all involve currency exchange. Understanding exchange rate patterns also allows for carry trade opportunities. Second, trends are relatively clear; by monitoring interest rate policies and monetary policies of different countries, you can roughly predict the direction of exchange rates. Third, liquidity is extremely high—daily trading volume exceeds 60 trillion USD globally, with high market transparency, making manipulation difficult.

Trading hours are also important. Banks generally operate from 9 a.m. to 3:30 p.m., closed on weekends. But margin trading doesn’t have a central exchange; it’s basically open 24/5. The market is active through four major sessions—London, Sydney, Tokyo, and New York—overlapping at times, providing many trading opportunities.

Finally, I want to say that there is no absolutely best method for forex trading. The key is to explore based on your risk preferences, capital size, and trading habits. The market offers many opportunities—if you study diligently, you’ll find a trading style that suits you. Sharpening your skills beforehand, practicing more, observing carefully, and waiting for the right moment will help you succeed when real money is on the line.